Question

On January 2, 2018, Meister Company issues $200,000 of 6% bonds. Interest of $6,000 is payable semiannually on June 30 and December 31. The bonds mature in 5 years. The bonds were issued at face amount. On the date of issue, Meister should recognize a liability of ________.

Answer 1

Answer:

The liability amounts to $200,000 would be recognized by the company

Explanation:

Liability is the accounting which is defined as the obligation to or something which the business owe to somebody else. And the liability is recorded on the right side of the balance sheet.

The liabilities involves earned premiums, accrued expenses, accounts payable. deferred revenues and mortgages.

So, in this case, On January 2, which is the issue date of bonds, the amount of liability for the company would be the amount of bond that is $200,000, and this amount will be acknowledged by company.